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Let  Us  HavG  the  Truth 


The  Whole  Truth 


And  Nothing  but  the  TPUTH 


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n  SPftCCH    DCLiVCRCD    BY   THE 


HON.  C  A.  BAPLOW 


m  the  riaguire  Wigwam,  oii  OctoDer  26,  i('^96 


Kingsley-liamcs  &  NcunerCo.  Print,  123    RroacJwHy,  L.  A. 


•  •       * 

c       *       • 


•  ••     •!  .     •      I  .       •  •• •  . 

:•  ..•:•. ' 


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•    .    • 


V  vt  •;.  v: 


•  •    • 

c     t 


R.  J.  WATERS'  BUSINESS  OPPORTUNITIES. 


R.  J.  WATERS'  BUSINESS 
OPPORTUNITIES. 

The  Republican  papers  and  orators  in  the 
Sixth  Congressional  district  are  having 
much  to  say  about  Mr.  C.  A.  Barlow's  bus- 
iness opportunities,  but  thev  cannot  put 
their  finger  on  a  single  act  of  his  that  has 
not  been  strictly  honorable  as  between  man 
and  man. 

What  is  Mr.  R.  J.  Waters'  business  rec- 
ord? Is  it  clean  and  will  it  stand  investiga 
tion? 

A  LITTLE  HISTORY 
Mr.  Waters  came  to  Redlands  in  1886,  as 
a  man  of  moderate  means  and  soon  there- 
after became  interested  in  the  Bear  Valley 
irrigation  enterprise.  In  1891,  that  com- 
pany was  re-incorporated  with  a  capital 
stock  of  $4,000,000.  Of  this  amount  $1,000,- 
000  was  preferred  stock,  which  was  entitled 
to  eight  per  cent  dividends,  and  $3,000,000 
was  common  stock,  which  was  entitled  to 
such  dividends  as  the  company  might  be 
able  to  pay,  after  the  preferred  stock  div- 
idends had  been  provided  for.  From  the 
reorganization  of  the  companv  up  to  a  short 
time  before  its  failure,  in  1893,  Mr.  Waters 
was  a  member  of  the  board  of  directors, 
and  for  a  portion  of  that  time,  he  was  the 
business  manager. 

DISCOUNTING  THE  FUTURE 

The  company  sold  water  rights     to  the 
Alessandro  and  Ferris  irrigation  districts  to 
the  extent  of  a  continuous  flow  of  8375  inches 
during  the  irrigation  season,  taking  in  pav- 
ment  therefor  Alessandro  district  bonds  to 
,  the  extent  of  $765,000.   and  Ferris  district 
I  bonds  to  the  extent  of  $240,000. 
I      These  bonds  wei-e  delivered  to  the  Bear 
j  Valley  Irrigation   company  on  the  distinct 
I  imderstanding  and     agreement     that     the 
I  money  received  from  the  sale  of  these  bonds 
was  to  be  used  in  constructing  a  new  daiii 
for  the  reservoir  and   otherwise  enlarging 
the  water  system  of  the  cornpanv,  so  as  to 
enable  it  to  deliver  to  the  districts  the  B^ir> 
inches   of  water  for  which  the  bonds  were 
(riven,    it   being  well   known  that  the  Bear 
Valley  company  at  that  time  did  not  have 
as   much   as   one   thousand  inches  of  water 
in  excess  of  the  amount  called  for  by  prev- 
iously existing  contracts. 

HIRING  A  STOCK  SHARF. 

The  company  employed  one  Charles  W. 
K  Greene  of  New  York  to  sell  its  stocks  and 
bonds,  agreeing  to  pay  him  fifteen  per  cent, 
on  all  sales  made.  To  assist  in  selling  the 
stock  the  company  declared  a  ten  per  cent, 
dividend.  At  first  the  common  stock  wa.i? 
sold  at  par,  but  under  the  stimulus  of  larare 
dividends,  the  price  was  gradually  forced  up 
to  $160  per  share. 


BIG  SALES— BIG  COMIVIISSIONS. 

The  company  thus  sold  about  one-half  of 
the  district  bonds  at  par  and  one-third  of 
the  common  stock,  receiving  in  all  about 
$1,500,000  therefor,  less  about  $22.5,000,  which 
was  paid  in  commissions. 
SILUI  COLLATERAL  CORFORATIONS. 

As  a  justification  of  these  large  di\idends, 
the  company  carried  on  its  books  and  into 
its  printed  statements  and  prospectuses 
more  than  a  million  dollars  of  purely  and 
absolutely  fictitious  assets,  known  to  be 
such  and  of  no  value  whatever  by  its  mana- 
gers, the  fraudulent  scheme  being  resorted 
to  of  forming  collateral  corporations  with 
purely  fictitious  capital  and  selling  property 
to  such  corporations  for  many  times  its 
actual  value,  and  taking  payment  in  fabulous 
amounts  of  the  stock  of  such  corporafions 
and  large  amounts  in  the  notes  of  such  cor- 
porations, and  then  immediately  releasing 
the  stockholders  of  such  sham  concerns  from 
all  stockhold'crs'  liability  upon  such  notes. 
Yet  this  sham  stock  and  these  worthless 
notes  were  carried  upon  the  books  and  into 
the  statements  of  such  company  at  their 
face  value  and  offsetting  positive  and  abso- 
lute liabilities  to  .such  full  value. 

WATERS   A  DIRECTOR  ALL  THE 
WHILE. 

Mr.  Waters  was  present  at  the  directors' 
meetings  of  the  Bear  Valley  Irrigation  Com- 
pany, as  a  member  of  its  board  of  directors, 
when  these  sham  sales  to  these  sham  cor- 
norations  were  made  AND  VOTED  FOR 
THEM,  and  also  voted  for  the  resolution  re- 
leasing the  stockholders  of  one  such  sham 
corporations  (the  Alessandro  Valley  Land 
company)  from  all  liability  on  account  of 
$172,000  of  the  notes  of  the  latter  company 
given  to  the  Bear  Valley  Irrigation  com- 
i^anv.  and  also  voted  for  a  later  resolution, 
which  authorized  the  Bear  Vallev  Irrigation 
company  to  indorse  and  OIT.ARANTEE  the 
pavment  of  such  notes,  in  order  that  money 
might  be  raised  upon  them  to  continue  the 
na-sTnent  of  the  unearned  "diviHends  to  the 
Bear  Vallev  company  stockholders  and 
further  inflate  the  stock. 

BIG   UNEARNED  DIVIDENDS 
Tho  sworn  statement  of  the  Secretary  of 
the  Bear  Valley  Irrigation  company  shnv.-s 
that  such  company  declared  and  paid  div- 
idends as  follows: 

Januarv   (?)    2,  1891,  a  cash  divi- 
dend  of  $12S,.527.15 

December  8,  1891,  a  cash  dividend 

of   142.fi25..'?3 

April  22.  a  cash  dividend  of 144,138.14 

Mav,  1892,  a  cash  dividend  of . . . .     18,.?60.nn 
August  2,  1892.  a  cash  dividend  of.  147,020.00 
December  13, 1892,  a  cash  dividend 
of    19,244.00 


^^^S 


December  15, 1892,  a  cash  di^^dend 
of    148,670.00 


Making  a  total  of $748,5S4.62 

Of  the  di\'iderids  so  declared,  there  was 
actually  paid  $694,5?)2.62,  leaving  dividends 
declared  and  unpaid  amounting  to  $54,252. 

Mr.  Waters  was  an  active  dii'Pctor  of  thp 
Bear  Valley  Trris'a^'ion  cnmmnv  during  all 
of  the  time  covered  hv  thpsc  dividends,  ex- 
cf>T)t  pnssihlv  the  last  $157,000  thereof,  and 
the  records  do  not  show  that  h-''  ever  nro- 
tested  or  voted  against  any  of  such  dhn- 
dends. 

Tlurinfr  the  period  of  time  in  whicTi  these 
dividends  ■were  deelired  and  naid.  the  flnnt- 
ing  indehtedness  of  the  "Penr  Vallev  Trri^a- 
tion  coTnnnnv  iuerensed  $420,000  nnd  dur- 
ins?  such  period  a  mortn-afp  indebtedness 
nf  such  companv  of  $300,000  became  due. 
but  was  in  no  wav  riaid  or  reduced,  but  an 
extension  of  navniertt  was  secured  un+il 
TJecember.  1S05.  "N^enrlv  one-hnlf  of  the 
monev  receiver!  from  flie  sale  of  stor-h  arid 
bonds  wns  T^nid  out  in  dividends,  and  Avliile 
some  monev  was  s^ent  in  the  conotrnet'ori 
of  finmes.  ni'^e  linos  nnd  otlior  similTr  im- 
provements, the  -tvater  sunnlv  of  thf"  com- 
rianv  was  not  increased  to  the  extent  of  one 
inch. 

F?MALL  LEaTTTTVTATE  FNTrOME 

Durinpf  the  time  that  +lie  eomoanv  w^as 
paviuf  these  enonnoiic  dividends  mnl.-ins' 
a  total  of  over  SfifiOl.OOO  to  its  Btorlcholf^prs. 
the  Icffitirnate  enrniuffS  of  +lie  cnrnnanv  frn"i 
the  rental  of  the  vtrater  did  not  exceer!  "640  - 
000.  Mobile  the  maintenancp  cViarges  of  thoir 
Ti^ator  svste'^i  during  sneb  tir"f>  e">^r'eede'1 
SlOS.Onn.  pnrl  tbe  eash  income  from  the  sale 
of  lands  did  not  ponal  the  expenditures  in 
connection  witli  the  land  account.  Yet. 
nevertheless.  Tvhile  such  necessary'  oiitmn  so 
larerelv  e-veee<^ed  the  ineome.  "^\'hile  the  float- 
insr  indelttedness  of  t^e  eornoanv  ittoc!  en 
larrelv  inereasinrr  and  the  fi">^f'd  indeVited- 
ness  mnfurin<T  and  going  imnaid.  tViesp  enor- 
mous riivi^ppiic.  fri  tlip  extent  of  $004,000. 
were   declared  and  paid. 

FT^  A  TTDTTLENT  RT  A  TT<lMF,"NrTR 
Tn  order  to  brinsr  about  these  laree  sales 
of  the  cani^'al  stock  of  the  "Rpar  Vallev  com- 
nanv  at  siir>Vi  handsome  figures,  running 
from  par  to  RO  ner  cent  above  nar.  the  mnn- 
arrprs  of  tho  eompanv  not  onlv  boomed  the 
stoek  h-i'  tlif>  nnvment  of  these  larTo  un- 
earned dividends,  but  thev  sent  forth  nub- 
lished  statements  in  w^hif'h  thev  iustifi^d 
such  dividends  and  such  high  nrices  of  thp 
stock  bv  sTiowing  that  all  of  the  di'^'ir'ends 
■were  paid  from  surnhis  earnings  and  that  a 
larTe  di^^^irlond  fund,  annroximatelv  one 
million  dollars,  yet  remained  intact  and  un- 
touched. 
WTDOWR  AND  OEPTTANFJ  PTTT^t^t^t? 

Reiving  upon  these  glittering,  false  and 
fraudulent  statements,  which,  however, 
seemed  to  be  borne  out  by  the  actual  pay- 
ment of  dividends,  eastern  and  foreign  in- 
vestors were  led  to  heavily  invest  in  the 


.stock,  one  Swiss  lawyer  thus  investing  over 
$150,000  of  trust  funds  in  his  keeping,  be- 
longing to  widows  and  orphans,  which  in- 
vestments proved  a  total  loss. 

FIFTEEM  FEK  CENT.  Dl\  IDEN'D. 

In  the  spring  of  1893,  a  fifteen  per  cent, 
dividend  was  declared  and  most  of  it  was 
paid,  but  a  few  months  later  the  company 
failed  with  over  $1,200,000  of  indebtedness 
with  no  money  to  pay  the  debts,  and  $53,000 
of  unpaid  dividends,  although  a  published 
statement  of  the  affairs  of  the  company,  is- 
sued a  short  time  before  the  failure,  showed 
over  one  million  dollars  to  the  credit  of  the 
dividend  fund. 

FELONY   AND  MISDEMEANOR. 

Those  who  are  acquainted  with  the  Penal 
Code  of  California  (see  sections  560  and 
565)  can  figure  out  wliere  these  transaetions 
place  men  who  pay  dividends  out  of  monev 
received  from  the  sale  of  stock,  or  who 
issue  false  statements  as  to  corporate  as- 
sets. 

GETTING  BONDS  TTNDETJ  FALSE  PRE- 
TENSES. 

The  voter  can  also  ascertain  to  what  ex- 
tent Mr.  Waters  and  his  assoeiates  kept 
fnitli  vnth  the  lando^vners  in  the  irrigation 
districts,  when  thev  used  the  proeeerls  of  the 
sale  of  distriet  bonds  to  pav  rliviflends  in 
order  to  inflate  the  price  of  th^  eompanv's 
stock,  instead  of  using  i*'  to  inr-rcase  tVie 
water  supplv  for  the  henefit  of  the  rancliers 
and  landowners  in  those  districts  who  had 
imposed  a  lien  upon  thoir  innrts  to  tv.^  px- 
tp"t  of  56^0  an  acre  in  order  to  pav  for  that 
■water  supplv. 

A   SHREWD  BUSINESS  MAN. 

Mr.  Waters  appears  to  have  heen  the 
shrewdest  man  in  the  Bear  Vallev  manage- 
ment, for.  v'hen  bv  reason  of  the  fraudulent 
fli-inrfpnrls  the  stock  rcaehod  a  marl.-pt  vabip 
of  $160  a  share  or  thereahouts.  ho  r.ror>epflprl 
to  upload  his  stoek  on  his  neirrhhors  anrl 
friends.  He  sold  for  msli  nnrl  hp  tradp^l 
for  propertv.  Soon  he  had  a  banV  aecount 
and  manv  pieces  of  good  real  pst^+p.  but  no 
Boar  Vallev  stock.  The  Board  of  Directors, 
of  which  he  was  a  member,  having  voteH 
these  large  dividends,  he  ■was  enahlpd  tospll 
his  stock  to  good  advantage  and  shortlv 
thereafter  the  affairs  of  the  companv  were 
placed  in  the  hands  of  a  receiver,  and  verv 
soon  the  stock  which  was  sold  at  so  great 
a  premium  could  not  be  sold  for  one  cent 
per  share. 

As  e-vidence  that  Mr.  Water»s  was  the 
Ipading  spirit  in  the  management  of  Bear 
Vallev  affairs,  it  should  be  borne  in  minrl 
that  he  was  about  the  onlv  memher  of  thp 
board  who  made  monev  bv  the  failure  and 
most  of  the  members  lost  very  heavily. 

WHAT  THE  WTND-tTP  SHOWED. 

■  Shortlv  aftenvards.  the  inevitable  crash 
came.  In  Febriiary.  1894.  judgment  was  ob- 
tained in  the  United  States  circuit  court  for 
the  southern  district  of  California,  in  the 


case  of  Jamea  Gilbert  Foster  vs.  Bear  Val* 
ley  irrigatiou  company,  for  the  sum  of  $405, 
000,  and  a  receiver  was  appointed.  'J  iie  re- 
port of  the  receiver  shows  such  a  wreck  as 
was  hardly  ever  before  known.  The  follow 
ing  extracts  from  the  receiver's  reports  and 
irom  the  decree  of  the  court  wdl  give  some 
idea  of  the  true  condition  of  the  attaii-s  ol 
this  company  that  had  a  short  time  before 
paid  to  its  stockholders  $694,000  in  divi- 
dends and  yet  claimed  to  have  on  hand  a 
dividend  tund  of  $l,0oi,325  as  surplus  earn- 
ings, over  and  above  all  liabilities  and  leav- 
ing its  capital  intact  and  untouched, 
lleceiver's  report  oi  July  20,  isyi,  says: 
"To  complete  the  plan  oi  tue  jjtar  V  al- 
ley irrigation  company  and  put  it  in  a  po- 
sition to  hil  Its  exibtmg  water  contructs  will 
require  an  expenditure  ol  at  least  $i,UU0,00U 
lu  excess  ol  tne  amount  required  to  pay  its 
indebtedness."  (,'ihe  indebtedness,  as  iound 
by  the  receiver,  then  exceeded  $1,200,000.) 
Ihe  annual  earnings  ol  tlie  company  are 
$80,574.87 ;  the  annual  liabilities  ol  the  com- 
pany are  $132,000,  showing  an  annual  deli- 
cit  of  $41,425.13." 

iDliICKEE  Ui'^  THE  CiKC LIT  COURT  UT 
Alj(JUyT27,  16^4. 

The  decree  of  the  circuit  court,  dated  Au- 
gust 27,  1894,  111  such  case,  among  other 
things,  hnde: 

"inat  the  annual  expense  of  maintain- 
ing the  plant  of  said  deiendant  corporation, 
the  interest  on  its  indebtedness  and  taxes 
upon  Its  property,  exclusive  of  the  compen- 
sation of  its  receiver  herein,  exceeded  the 
annual  revenue  of  the  cori>oration  by  the 
sum  of  at  least  $41,000,  and  that  said  cor- 
poration IS  insolvent  and  unable  to  pay  its 
indebtedness." 

Receiver's  report  of  February  5,  1895, 
says: 

■'Defendant  was  then,  when  receivers  were 
appointed,  March,  1894,  without  funds  and 
without  credit;  its  works  were  out  of  re- 
pair, and  its  employes  disgruntled  by  rea- 
son of  the  long  continued  non-payment  of 
their  wages,  and  all  its  i)roperty  advertised 
for  sale  for  delinquent  state,  county,  city 
aui^  irrigation  district  taxes.  The  corpora- 
tion generally  was  in  bad  repute  in  every 
locality  in  which  it  was  delivering  water." 

"That     petitioners     Jound 

themselves    hampered   by   contracts  unlav- 
orable    to    defendant,   made   by  pretended 
agents  of  the  corporation,  wlio  assumed  des 
potic    authority  in   bartering  away   rights, 
privileges  and  emolu.meats  ol  defendant." 

RECEIVER'S  CERTIFICATES  ISSCED 
AMOUNTING  TO  $153,000. 
In  order  to  pay  the  operating  expenses  of 
this  property  during  the  year  that  such  suit 
was  pending,  and  to  relieve  the  property  from 
pressing  laborers  and  mechanics'  liens,  it  be- 
came necessary  not  only  to  apply  all  the  in- 
come received  from  the  property  during 
such  time,  but  in  addition  to  issue  receiver's 
certificates  amounting  to  $153,200.48,  which 


were  made  a  hrst  lien  upon  all  of  the  com- 
pany's property. 

CREDITOR  BUYS  IN  THE  ENTIRE 
PROPERTY  FOR  $380,000. 
This  litigation  resulted  in  all  of  the  prop- 
erty of  the  Bear  Valley  Irrigation  company 
(WHICH  THE  YEAR  BEFORE  WAS 
CARRIED  ON  THE  BOOKS  AND  INTO 
THE  STATEMENTS  AND  PROSPEC- 
TUSES OF  THE  COMPANY  AS  BEING 
WORTH  OVER  $5,000,000)  being  sold  to  a 
judgment  creditor  of  the  company  for  $380,- 
000,  subject  to  about  $450,000  the  mortgage 
indebtedness,  and  $153,000  the  receiver's 
certificates. 

PRESENT  VALUE  OF  THE  PLANT. 

Within  the  last  month  a  plan  of  re-organ- 
ization of  the  Bear  Valley  property  has  been 
in  active  negotiation  between  the  users  oi 
water  under  the  Bear  Valley  system  and  the 
present  owners  of  the  property  with  the  re- 
Eult  that  the  owners  of  the  property  and 
those  having  liens  upon  it,  includdng  the 
owners  of  the  mortgage  and  the  holders  of 
the  receivers'  certihcates,  have  all  proposed 
to  sell  and  surrender  all  interest  in  the  prop- 
erty lor  the  sum  of  $525,000,  and  to  take  their 
pay  in  long-time  bonds,  bearing  a  low  rate 
of  interest  to  be  made  a  lien  upon  the  prop- 
erty. 

The  foregoing  are  irrefutable  facts,  estab- 
lished by  the  records  of  the  Bear  Valley  ir- 
rigation company,  and  by  the  court  records. 

MR.  WATERS  TRIES  TO  EXCUSE  HIS 
CONDUCT 

Air.  Waters  and  his  mouthpiece,  the  Los 
Angeles  Daily  Times,  are  now  trying  to 
make  it  appear  that  he  disapproved  ot  all 
this  looting  of  the  Bear  Valley  Irrigation 
company,  and  of  the  payment  of  these  un- 
lawiul  dividends,  and  that  he  retired  from 
the  company  before  these  things  were  done. 
Such  attempted  defense  is  contrary  to  the 
facts  and  the  records  and  is  absolutely  false. 
The  books  of  the  Bear  Valley  Irrigation  com- 
pany show  that  Mr.  Waters  was  still  a  di- 
rector of  that  company  until  nearly  $000,- 
000  of  these  unlawful  dividends  were  paid, 
and  that  he  never  voted  or  protested  against 
any  of  them. 

'That  he  did  unload  and  get  down  and  out 
of  the  company  before  the  last  dividend  was 
declared  and  before  the  stock  depreciated 
and  its  real  actual  worthlessness  became 
generally  known,  is  conceded,  and  Mr.  Wa- 
ters is  welcome  to  all  the  credit  to  which 
this  wise  act  of  caution  entitles  him.  For 
a  large  portion  of  the  time  during  which 
such  dividends  were  being  declared  and 
paid,  Mr.  Waters  was  its  general  manager 
and  it  was  largely  his  scheming  brain  and 
his  guiding  hand  that  was  engineering  and 
pronioting  the  company's  affairs  during  that 
period  of  time,  when  this  scheme  of  allur- 
ing, but  unlawful  dividends  was  decided 
upon.  He  was  at  the  helm  when  the  pay- 
ment of  these  dividends  began  and  he  did 
not  retire  from  the  management  imtil  the 


delusion  was  fully  launched  and  the  stock 
sales  were  booming. 

NOT  A  CREATURE  OF  THE  GREAT 
SOUTHERN  CALIFORNIA  BOOM 
This  reckless  financiering  cannot  be  ex- 
cused by  attributing  it  to  the  prevailing  in- 
fatuation that  seemed  to  possess  so  many 
people*  in  Southern  California  during  the 
great  real  estate  boom  of  1887-88,  for  it  had 
its  origin  two  years  later,  after  values  had 
receded  to  normal  conditions  and  while  the 
serious  lessons  of  the  boom  were  still  fresh 
in  the  minds  of  all.  So  this  Bear  valley 
South  Sea  bubble  cannot  be  excused  as  a 
creature  of  the  great  Southern  California 
real  estate  boom. 

THE    TIMES'   DEFENSE  OF  WATERS. 
In  its  attempted  editorial  defense  of  Mr. 
Waters  in  the  Times  of  October  25,  1898,  it 
is    conceded    that  the  "characteristic  pro- 
moter,"  F.  E.   Rowan,  the  founder  of  the 
Bear  valley  enterprise,,  secured  the  assist- 
ance of  Mr.  R.  J.  Waters  as  his  CONFI- 
DENTIAL ADVISER  in  connection  with 
floating  the  Bear  valley  proposition.    The 
iictitious  capitalization  of  the  enterprise  is 
admitted    by    the    Times  in  the  following 
language:     "The  campaign  of  inflation  was 
on;   the  stock  of  the  company,  represent- 
ing a  paid-up  value  of  §42  iier  share,  was 
called    in,    and    a  double  quantity  issued; 
this  was  in  time  called  in  and  $3  of  face 
value  in  stock  was  issued  for  $1  of  the  sec- 
ond issue,  leaving  the  stock  with  a  paid- 
up    value    of  $7  per  share.     But  notwith- 
standing this  outward  appearance  of  pros- 
perity, the  managers  of  the  company  were 
driven  to  desperate  straits  by  the  fact  that 
the  floating  indebtedness  of  the  company 
had   mounted  up  to  half  a  million  dollars. 
THEN  IT  WAS  THAT  THEY  CAME  TO 
MR.    WATERS  AND  BESOUGHT  HIM 
TO     RESCUE    THE  COMFxVNY    FROM 
ITS  DESPERATE  POSITiOlS.    While  he 
had  but  a  trifling  interest  in  the  company, 
and  while  the  company  had  plunged  into 
recklessness  in  opposition  to  his  advice,  still 
his  property  was  under  the  Bear  valley  sys- 
tem and  he  had  LONG  HELD  CONFIDEN- 
TTAL  RELATIONS  WITH  THE  PRIN- 
CIPAL   PROMOTERS    of    the     company. 
THESE  CONSIDERATIONS  WERE  SUF- 
FICIENT   TO   INDUCE    HIM    TO  LAY 
HOLD  OF  THE  COMPANY'S  AFl'AIRS 
TO  RESCUE  THEM.     So  confused  were 
the    aftairs    of    the    company  that  it  took 
ninety  days  to  ascertain  the  amount  of  the 
indebtedness,   and  yet,   despite  all  the  ob- 
staples,   within  less  than  a  year  the  Bear 
valley  company  had  paid  off  ever  dollar  of 
its  floating  indebtedness." 

There  are  some  grains  of  truth  in  these 
statements.  What  is  said  as  to  the  inilation 
of  the  stock  is  true;  what  is  said  as  to  Mr. 
Waters'  relation  with  the  promoters  of  the 
company  is  true;  that  his  interest  in  the 
company  and  his  relations  to  its  promoters 
induced  him  to  lay  hold  of  the  company's 
affairs  is  true,  but  it  is  not  true  that  with- 


in a  year  thereafter  the  company  had  paid 
ofl  every  dollar  of  its  floating  indebtedness. 
Ou  the  contrary,  its  indebtedness  was  large- 
ly increased  during  such  period.  The  truth 
is  that  Mr.  Waters  took  hold  of  the  afiairs 
of  the  company  just  prior  to  the  beginning 
of  the  campaign  of  the  inflation  of  stock  by 
the  payment  of  unearned  and  unlawtul  div- 
idends, and  he  remained  general  manager 
thereof  for  a  largo  portion  of  the  time  cov- 
ered by  such  unlawiul  payments.  He  act- 
ively connived  at  the  various  schemes  re- 
sorted to  to  bring  about  tlie  result  ot  stock 
inflation;  printed  prospectuses,  signed  by 
iiim  as  general  manager,  justihed  investors 
in  believing  the  stock  was  worth  all  that 
Mr.  Charles  W.  Greene,  as  its  financial 
agent,  was  claiming  it  to  be  worth. 

Mr.  Waters  may  have  had  some  disagree- 
ments with  Mr.  Greene,  during  the  latter 
portion  ot  the  campaign  of  inflation  that 
caused  the  company  to  hold  on  to  Mr.  Greene 
and  to  permit  Mr.  Waters  to  step  out  of  the 
directory,  but  these  misunderstandings,  it 
any,  were  long  after  the  mischief  had  been 
done,  and  was  when  the  company  was  on 
the  brink  of  ruin,  and  nothing  but  such 
dazzling  and  audacious  achievements  as 
those  of  Charles  W.  Greene  in  continuing 
to  sell  stock  at  ^IbU  a  share  seemed  to  otter 
any  tiope  of  staying  a  certain  collapse  of  the 
entire  concern. 

In  the  opening  of  its  defense  of  Mr. 
Waters,  in  the  editorial  above  referred  to, 
the  Times  says: 

"Before  that  gentleman's  (Mr.  Waters) 
nomination,  the  work  of  the  backbiters, 
which  were  slandering  Mr.  Waters  prompted 
the  Times  to  investigate  the  matter,  not 
through  suspicion  of  Mr.  W^aters'  character, 
but  to  ascertain  if  the  facts  were  such  that 
they  could  even  be  considered  to  cast  odium 
upon  that  gentleman. 

"As  a  result  of  that  investigation,  this 
paper  found  that  the  whole  connection  of 
Mr.  Waters  with  the  Bear  Valley  company 
was  such  as  to  cast  honor  upon  him." 

In  connection  with  this,  its  defense  of 
Mr.  Waters,  the  Times  says: 

"At  this  time  (the  year  that  Mr.  Waters 
came  to  the  rescue  of  the  Bear  Valley  com- 
pany) came  the  amazing  announcement  that 
Charles  W.  Greene  was  selling  the  company's 
stock  in  Europe  for  $160  on  a  guarantee  of 
15  per  cent,  annual  dividends. 

"The  idea  of  paying  $15  dividends  per 
year  on  an  investment  of  $7  seemed  to  Mr. 
VVaters  to  be  the  height  of  absurdity,  and  he 
gave  to  his  associates  the  alternative  of 
choosing  between  sustaining  Mr.  Greene  or 
allowing  him  to  drop  from  the  company. 
The  stockholders  were  dazzled  with  the 
achievements  of  Mr.  Greene,  and  R.  J. 
Waters  stepped  out  of  the  Bear  Valley  com- 
pany with  a  record  for  honesty  and  busi- 
ness sagacity  which  have  been  often  illus- 
trated by  the  calamities  which  have  beset 
the  company  as  a  result  of  its  gross  mis- 
management, against  which  Mr.  Waters  per- 
sistently raised  his  voice,  though  in  vain, 
and  that  is  the  whole  story." 


We  have  no  evidence  as  to  the  thorough- 
ness of  the  Times'  investigation  as  to  Mr. 
Waters'  connection  with  the  Bear  VaJley 
company,  but  that  it  was  probably  conhned 
to  asking  Mr.  Waters  if  he  wasn't  aJi  right 
IS  evidenced  by  the  following  facts  and 
records,  taken  either  from  the  minute  book 
of  the  Bear  V'alley  Irrigation  company,  or 
Irum  the  court  records: 

The  minute  book  o.  the  Bear  Valley  Irri- 
gation company  shows  the  first  meeting  of 
such  company  was  hatl  for  the  purpose  of 
organization,  upon  December  19th,  1890,  at 
winch  meeting  such  company  purchased  the 
entire  water  plant  of  the  Bear  Valley  Land 
and  Water  company,  giving  therefor  two 
million  dollars  ($2,000,000)  of  its  common 
stock  and  purchased  the  property  of  the 
Alessandro  Land  and  Development  com- 
))any,  giving  therefor  four  hundred  thousand 
dollars  ($400,000)  of  its  common  stock,  leav- 
ing in  the  treasury  undisposed  of  one  million 
dollars  ($1,000,000)  of  its  preferred  stock 
and  SIX  hundred  thousand  dollars  ($600,000) 
of  its  common  stock. 

The  same  minute  book,  page  7,  at  the 
fourth  meeting  of  the  board  of  directors  of 
the  Bear  Valley  Irrigation  company,  held 
December  31st,  1890,  twelve  days  after  its 
organization,  shows  that  R.  J.  Waters  was 
regularly  elected  as  a  director  of  such  com- 
pany and  took  his  place  on  the  board  At 
the  same  meeting,  the  minutes  show  that  R. 
J .  Waters  was  elected  a  member  of  the  ex- 
ecutive committee  of  such  company. 

At  the  next  meeting  of  the  company,  Jan- 
uary 3d,  1891,  four  days  later,  R.  J.  Waters 
was  appointed  assistant  general  manager 
of  the  company  (see  page  11,  minute  book). 

On  March  3d,  1891,  (see  page  85  minute 
book)  R.  J.  Waters  was  re-elected  director 
and  assistant  general  manager,  and  on  such 
date  a  financial  department  of  such  com- 
pany was  established  (see  page  89,  minute 
book)  and  R.  J.  Waters  was  elected  the 
head  of  the  financial  department  and  direc- 
tor for  the  coming  year. 

1K9^^^  '^""'^  ^^^'  ^^^^'  ^^^^  minute  book,  page 
154)  the  corporation  declared  a  dividend 
ot  tour  per  cent,  on  its  preferred  stock  and 
hve  per  cent,  on  its  common  stock.  Mr. 
Waters  was  present  as  a  director  and  voted 
lor  this  dividend. 

^^"  August  22,  1891,  (see  minute  book. 
i^f^^Tir^  '^  resolution  was  introduced  bv 
Mr  Waters,  and  passed,  binding  the  Bear 
^  ill  icy  lrn«>atu)n  company  to  guarantee  the 
payment  of  the  principal  and  interest  of  the 
Herns  and  Alesandro  district  bonds,  owned 
by  the  company,  aggregating  in  amount  over 
one  million  dollars  ($1,000,000).  This  reso- 
lution was  reiterated  in  more  formal  lan- 
guage at  subsequent  meetings  held  Septem- 
ber 17th,  1891,  and  October  13th,  1891,  (see 
page  197  and  213,  minute  book. 

On  October  22,  1891,  ]\Ir.  Waters  was 
elected  genera]  manager  of  the  company, 
,  uistead  of  merely  assistant  manager,  so  thai 
at  such  dates  he  was  a  director,  general  man- 
ager, and  the  head  of  the  financial  depart- 
ment. 


The  court  records  show  that  in  a  subse- 
quent attempt  to  defend  the  policy  of  the 
Bear  \  alley  Irrigation  company  in  its  course 
in  paying  these  large  dividends",  that  its  man- 
agers were  relying  upon  the  fact  that  in  order 
to  keep  faith  with  the  stockholders  to 
whoin  stock  had  been  sold,  it  was  nece8.sary 
to  live  up  to  the  representations  made  to 
theni  111  printed  ciicu'ars  sent  them  prior  to 
their  purchase  of  stock.  The  first  circular 
referred  to  as  justifying  such  continuance  ot 
dividends  was  signed  by  Charles  W.  tireene 
financial  a^ent  of  the  Bear  Valley  Irrigation' 
company,  from  which  we  take  the  following 
extracts: 

A  FAVORABLE  BHOWmO. 

New  York,  Nov.  12th,  1891. 
At  a  conference  held  here,  at  which  the 
Cahtornia  directors  were  represented  bv 
t.  L.  Brown,  chief  engineer,  and  R.  J. 
Waters,  genei-al  manager  of  the  Bear  Val- 
ley Irrigation  company,  and  the  leading  East- 
ern stockholders,  a  very  careful  examination 
as  to  the  finanacial  condition  of  the  company 
was    made,   with  the  following  results: 

Fifth— The  amount  of  the  securi- 
ties, irrigation  district  bonds  and  land  notes 
in  the  said  fund  (dividend  funds)  amounts 
now  to  almost  one  million,  five  liundred 
thousand  dollars  ($1,500,000).  There  have 
been  other  sales  of  water  rights,  agreed  to, 
but  not  consummated,  which  will  increase 
this  fund  to  more  than  two  million  dollars 
($2,000,000).  This  can  be  realized  on  read- 
ily as  needed,  for  dividends. 

Sixth— It  is  therefore  deemed  justifiable  to 
announce  that  the  company  will,  in  addition 
to  the  regular  dividends  of  five  per  cent 
on  each  date,  January  1st  and  July  1st, 
respectively,  pay  an  extra  dividend  on  com- 
mon stock  on  the  1st  of  April,  or  a  total  of 
15  per  cent,  a  year.  This  rate  can  be  main- 
tained beyond  question,  continuously. 

Eighth— It  is  also  considered  that 
the  present  capital  will  e  be  sufficient  to 
meet  the  requirements  of  the  company  for 
the  development  of  its  entire  plant,  and  the 
completion  of  its  works  as  planned.     . 

Under  these  circumstances  1  am  justi- 
fied in  advancing  the  price  of  common  stock, 
or  as  much  of  it  as  remains  beyond  the  pres- 
ent selling  price. 

Not  to  do  injustice  to  the  agents  AVho 
rnay  have  transactions  pending,  I  may  adopt 
the    following  plans: 

Fifty  thousand  dollars  ($50,000)  of  the 
common  stock  will  be  offered  to  sell  at  one 
hundred  and  fifteen  dollars  $115)  per  share; 
agents  Avill  be  notified  by  telegraph  Avheii 
the  amount  has  been  taken. 

The  second  fifty  tliousand  dollars  of  the 
comiiaiiy  stock  will  be  sold  for  one  hundred 
and  twenty  dollars  ($120)    per  share. 

The  tiiird  fifty  thousand  dollars  of  the 
company  stock  will  be  sold  at  one  hundred 
and   tweitty-five  dollars  ($125)  per  share. 

The  fourth  and  last  fifty  thousand  dollars 
of  the  company  stock  vnll  be  sold  at  one 


hundred  and  thirty  dollars  ($130)  per  share. 
You  will  readily  see  that  this  stock,  even 
at  $150  per  share,  is  a  better  investment  to 
a  purchaser  than  when  it  was  offered  at  par, 
and  when  only  ten  per  cent,  dividends 
were  provided  for. 

Ahnost  eight  hundred  thousand  dollars 
($800,000)  has  been  expended  in  improve- 
ments since  that  time. 

I  need  only  add  in  conclusion  that  the  pur- 
chasers of  this  stock  are  getting  an  excep- 
tional investment,  combining  the  two  ele- 
ments of  absolute  safety  and  high  rate  of 
regular  dividends.  ,     i  ,        j 

Full  information  will  be  furnished  by  ad- 
dressing, CHARLES  W.  GREENE, 
Financial  agent,  Murray  Hill   Hotel,  New 
York  City.     Cable  address  "See  Greene, 
New  York." 

WATERS  BOOMING  THE  STOCK. 
This  circular  was  largely  distributed 
throughout  the  Eastern  States,  England, 
Scotland,  Switzerland,  and  elsewhere,  under 
the  express  sanction  and  aproval  of  Mr.  R. 
J.  Waters,  the  head  of  the  financial  de- 
partment and  general  manager  and  a  direc- 
tor of  the  Bear  Valley  Irrigation  company, 
at  the  time  such  circular  was  issued. 

But  in  a  printed  report,  issued  by  Mr. 
Waters,  as  the  general  manager  of  the  Bear 
Valley  Irrigation  company  to  the  stockhold- 
ers of  such  company,  dated  Redlands,  Cal- 
ifornia, March  1,  1892,  he  goes  way  beyond 
Mr.  Greene  in  emphasizing  the  value  of  the 
stock  of  the  Bear  Valley  Irrigation  com- 
pany, as  the  following  extracts  fronJ  such 
report  demonstrate: 

(Extracts  from  report  of  R.  J.  VVaters, 
general  manager,  to  the  stockholders  of  the 
Bear  Valley  Irrigation  company.) 

In  the  financiering  of  the  company,  at  the 
date  of  the  organization,  that  a  capital  9! 
four  million  dollars,  $(4,000,000),  would 
fully  provide  for  the  completion  of  the 
works,  as  then  projected,  and  that  all  of 
the  income  of  the  company,  from  whatever 
source,  should  thereafter  be  available  for 
distribution  to  the  stockholders.     .     .     . 

The  income  of  the  company  has  been  so 
exceptionally  large  that  while  ample  pro- 
vision can  be  made  for  the  pay- 
ment of  the  dividends  upon  the  preferred 
stock  of  eight  per  cent  and  on  the  com- 
mon stock  of  fifteen  per  cent,  annually,  it 
is  believed  there  will  still  be  an  ample  sur- 
plus for  the  completion  of  the  plant  from 
the  income  of  the  company,  and  to  provide 
for  all  the  extensions,  without  making  fur- 
ther increase  of  the  capital  account  by  sales 
of  additional  stock.  This  surplus,  due  pro- 
vision being  made  for  the  preferred  stock, 
belongs  to  the  common  stockholders,  and  it 
is  proposed  that  as  the  expenditures  reach 
round  amounts,  new  stock  shall  be  issued 
for  corresponding  amounts  to  this  class  of 
shareholders,  thereby  increasing  their 
holdings,  and  indirectly,  their  dividend  ac- 
count. ^  ,  .  , 
This  also  has  the  merit  of  keeping  down 


rate  of  dividend,  which,  if  fixed  at  a  high 
percentage,  might  prejudice  the  company 
in   the  estimation   of  its  patrons.     .     .     . 

The  water  supply,  which  this  company 
has  at  present  acquired  is  sufi'icient  for  the 
ultimate  irrigation  of  250,000  acres,  allow- 
ing for  a  succession  of  dry  years  and  for  all 
the  industrial  enterprises  and  for  a  popula- 
tion of  one  hundred  thousand  people.  Such 
development  is  not  the  work  of  a  single  de- 
cade; in  fact,  it  can  never  be  completely  ac- 
complished. 

The  income  of  the  past  year,  although 
very  large, is  quite  likely  to  be  exceeded  in 
the  present  year — 1892.  As  community  or- 
ganizations are  being  made  in  every  direc- 
tion and  the  organization  of  subsidiary  com- 
panies to  this  parent  company  has  already 
begun. 

The  directors  will  easily  accord  the  accu- 
mulation of  the  surplus  fund,  so  as  to  abso- 
lutely insure  the  regular  payment  of  divi- 
dends, and  thereby  enhance  the  market  val- 
ue of  its  stock  and  extend  its  repuation  and 
financial  standing,  so  that  its  indorsers 
and  its  securities  it  may  have  to  sell  will 
demand  respect. 

As  to  the  preferred  stock,  it  will  be  noted 
that  the  present  account  upon  the  securities 
held  in  the  dividend  fund  is  quite  ample  to 
make  the  payments  at  the  rate  of  8  per  cent 
leaving  to  the  common  shareholders  all  the 
direct  profits  resulting  from  the  operations 
of  the  company.    Respectfully  submitted, 

R.  J.  WATERS, 
General    Manager    Bear    Valley    Irrigation 
Company. 

This  circular,  while  addressed  to  the  ex- 
isting stockholders,  was  used  by  Mr. 
Charles  VV.  Greene,  the  financial  agent  of 
the  company,  with  prospective  purchasers 
of  stock,  as  an  inducement  to  justify  them 
to  purchase  stock  at  the  exorbitant  figures 
named  by  him  in  hid  previous  circular. 

In  view  of  the  positive  statements  con- 
tained in  this  circular  that  the  income  of 
the  company  was  sufficient  to  continue  the 
payment  of  the  regular!  8  per  cent,  dividends 
on  the  $1,000,000  of  preferred  stock  and  the 
15  per  cent  annual  dividends  on  all  of  the 
common  stock,  it  is  difficult  to  see  how  the 
Times  reaches  the  conclusoin  either  that 
Mr.  Waters'  connection  with  the  Bear  Val- 
ley company  "cast  honor  upon  him,"  or  that 
he  considered  as  the  "height  of  absurdity" 
Mr.  Greene's  scheme  to  pay  15  per  cent  an- 
nual   dividends. 

MORE  DIVIDENDS. 
Resuming  again  Mr.  Waters'  record,  as 
shown  by  the  minute  book  of  the  Bear  V  al- 
ley Irrigation  company,  it  is  found  that  on 
December  8,  1891,  (see  minute  book,  page 
233),  a  dividend  was  declared  of  4  per  cent, 
on  the  preferred  stock  and  5  per  cent  on 
the  common  stock,  payable  January  1,  1892. 
The  record^  shows  Mr.  Waters  to  have  been 
present  at  this  meeting  and  to  have  offered 
no  opposition  to  the  dividends. 

The  minute  book,  under  date  of  March  1, 
1892,  shows  the  annual  meeting  of  the  stock- 


holders  of  the  Bear  Valley  Irrigation  com- 
pany, and  that  Mr.  Waters'  printed  report, 
extracts  from  which  have  been  set  forth 
above,  was  "read,  received,  ordered  filed 
and  adopted,"  and  that  Mr.  Waters  was  re- 
elected a  director  for  the  corporation  for  the 
next  ensuing  year. 

WATERS  RE-ELECTED. 

A  meeting  of  the  newly  elected  board  of 
directors  of  the  company,  held  tipon  the 
same  day,  (see  minute  book,  page  25.3),  shows 
Mr.  Waters  was  re-elected  general  manager 
for  the  next  year. 

On  April  22,  1892.  (see  minute  book,  page 
274),  the  minutes  show  that  a  dividend  of  5 
per  cent  on  the  common  stock  of  the  com- 
pany was  declared.  Director  Morrison  alone 
voting  against  this  di^ndend. 

This  was  an  extra  dividend  of  5  ner  cent, 
in  addition  to  the  regular  annual  10  per 
cent  dividend,  so  as  to  make  the  total  divi- 
dend on  the  common  stock  ^5  per  cent  pp'^ 
annum  in  accordance  with  the  promise  set 
forth  in  the  Greene  and  Waters  circulars. 

.Tune  7,  .1802,  Tsee  page  288  of  minute 
book),  a  dividend  of  4  per  cent  on  the  pro 
ferred  R<^ock  was  declared,  payable  Julv  1. 
1892.  Mr.  Waters  was  present  at  this  mect- 
inff  and  offered  no  oppo.sition  to  the  resolu- 
tion. 

On  June  n.  1892.  ("sec  paf'P ''SR  of  minuf f^ 
book),  Mr.  Waters  tendered  his  resifnafi'^" 
as  (TPneral  mnnarffr  of  +1-ip  comnnriv.  as  dirl 
nearlv  all  the  other  officers  of  fhc  /^om- 
panv.     The  same  was  laid  upon  +Vip  fpWo 

On  -Tune  14.  189''.  fspp  paf^po  288  and  ''R91 
thp  rPsifnations   of   all  flip  nfftVors  f rxnflprrifl 
v.^ere  accented,  but  Mr   "R.  .T.  Watcro  ti'ps  nr 
nnnt^  rp-plpp*-pd  general  manager,  with  sa'iip 

qplnrT    ns    l-ipfnrp 

On  .Tune  15.  1892.  fsee  pagp  291  minute 
V>ook).  a  np'w  pvprntivp  cornmiftee  was  an- 
nointed.  of  which  Mr.  Waters,  general 
managpr.  w^as  marlp  chairman. 

On  August  ''   180'>  fsee  pa^p  .31.').  minutes'!, 
on  motion  of  Mr.  Waters.  di\-idpnd  of  .'i  po>- 
cpnt.    on    the   common    stock  was  declared 
v-'^^lTonf   opposition. 

On  XTrivpTnTipr  1  1892  (=pf^  mirufp  book 
nanrp  32.'iV  Mr.  Waters  was  plectpd  seconrl 
vi^'o  riT-ociflprit. 

On  "Wovprnber  2.  1892  fminute  book,  page 
.3.30).^  Mr.  Waters  resigned  as  second  vice- 
prpsidput  and  general  manager. 

On  Dpcpmber  2.  1892  fsee  minute  book, 
page  .3.32).  a  resolution  Tvas  passed  author- 
irip"'  fl->e  snip  of  the  Wiite  W^a^pr  ranch. 
SIno-w  Creek' rarieli  nnd  all  Tvater  rights  eon- 
nop+pfl    +lipvp-\vi<-b     nnrl    3030   sharps   of  tVip 

t-'slm     '\^pnpT-     \'\^nter      ponrnnrtTT      sfnek      fo-r 

one  hnndre*!  thonsand  dollar's  proposi- 
tion remaining  good  for  sixty  days  and  a 

commission  of  five  tTiousand  dollars  f^.'iOOO) 
to   l-'C   allowed. 

'N'o+''vithstnndinrr  this  the  coninanv  con- 
tinued to  thereafter  cnrrv  such  pronertv 
upon  its  books  and  into  its  nrinted  state- 
nien^^s  and  prosrieetuses.  as  brwiprr  a  value 
of  $600.00n.  so  that  t>>ev  micrlif  elaim  that 
the  capital  was  not  being  diminished  or  en- 


(   croached  upon   in   their  subsequent  claims 

I   that  their  dividend  fund  amounted  to  nearly 

one   million   five  hundred  thousand  dollars 

($1,500,000). 

WATERS   RESIGNS 

On  December  2,  1892  (miniute  book,  page 
3.32),  Mr.  Waters  resigned  as  director  of 
the  company. 

From  the  foregoing  it  will  be  seen  that 
Mr.  Waters  was  director,  general  manager 
and  head  of  the  financial  department  ot 
the  Bear  Valley  Irrigation  company  during 
the  whole  period  covered  by  the  dividends 
which  had  been  paid  up  to  this  date, 
amounting  to  $580,670.62. 

In  the  face  of  these  facts,  all  of  M'hich 
are  matters  of  record,  to  claim  that  IMr. 
Waters  is  not  responsible  for  the  declaring 
and  payment  of  these  unlawful  and  un- 
earned dividends  and  for  the  promulgation 
of  the  false  and  fraudulent  reports  which 
resulted  in  the  sale  of  the  company's  stock 
and  bonds  and  fictitious  prices,  is  so  utterly 
false  as  should  put  to  shame  any  one  who 
utters  such  a  statement. 

The  facts  doubtless  are  that  ]\Tr.  Waters' 
"'ithdrawal  from  the  Bear  Vallev  Irriga- 
tion company  and  its  management  was  oc- 
^■;<sioned  bv  the  conviction  that  the  end 
"f  the  confidence  game  was  at  hand  and 
'^'•nt  ine^ntable  disaster  stnred  tlir  companv 
■n    the   faee.    and    l^is   resignation    •"'as   not 

o<^>easioned  bv  Mr.  Greene's  nolie^'  of  naviTiT 
fontiuued  dividends.  but  rather  b^' 
tl-ip  realization  of  the  fact  that 
tl'P  companv  could  no  longer  scrape 
I'l'fether  anv  fimds  from  nnv  soiiree 
ivitli  which  to  pay  further  dividppds.  As 
evidence  of  this  fact,  on  December  14.  1892. 
twelve  davs  after  ]\Tr.  Waters  resignerl  fsee 
•  -■:.info  V)ook.  vol.  TT.  nafTo  ^1.  a  rlividend 
of  4  ner  cent  on  the  nrpferrcrl  cfneV  ■was 
rlppla^'ed  and  on  Dpeember  1".  1900  friafrps 
^  iTifl  ^  minute  book,  vol  JTI.  a  .5  nor  cent 
rli'M'dend  was  declai-ed  on  the  coTirnon  stock. 

Seeing  no  possibib'tv  of  rnpeting  the  pav- 
"T--nt  of  these  di'vidends  tlipv  ivprp  re<^on. 
siflered  at  a  rneeting  of  the  comnnnv  helrl 
.January  16.  189.3  (m^^c  1.'5.  vol.  IT.  minnt'^ 
booV).   and   botb   dividends  were  rescinded 

Ml-  Charles  W.  Greene,  rpalizinrr  that  't 
would  be  ruinous  to  announee  to  the  -^vorl'' 
that  tbe  regular  expected  dividenrl  -vt-ouI'I 
not  h'-<  forti^r-oming  returned  to  T'edlan'^s 
fr-nrn  "NToiv  Vork  and  insisted  that  lie  eonM 
finanee  the  pnvment  of  such  caneplpd  divi- 
d^ufls.  and  *^bereafter.  on  the  31st  dav  of 
.Tpniim-v.  18Q.3.  the  aetfon  of  thp  ^^oai-d  in 
P,nn/^olin<T  thp  4  and  B  npr  ppnt  dividpnds 
of  T^of»pt-r-» »-»pT.  ^4th  and  l.^^^'*  ii-oc  cof  osi^'^ 
and  annulled,  and  such  dividends  reinstated 
pr*/^    cindered    noid. 

The  result,  ho^vp^•pr.  si'owpd  that  $,'>4.2-'i2 
was  neA^er  paid,  but  notwithstnndinrr  tbis 
fact,  on  April  21.  1893  Tscc  minute  book, 
page  73),  a  dividend  of  ."i  p^r  cent  was  dp- 
elared  on  the  common  stoek.  payable  ATa^' 
1,  1893,  no  portion  of  which  was  ever  paid. 

From  this  it  is  evident  that  Mr.  Watera 


410895 


stayed  with  the  dividend  policy  as  long  as 
suckers  would  continue  to  bite. 

As  a  further  evidence  that  Mr.  Waters, 
even  after  his  resignation  from  the  com- 
pany, was  not  willing  to  condemn  the  policy 
of  the  payment  of  these  enormous  divi- 
dends, he*  is  on  record  as  upholding  the 
company  in  their  course  of  so  doing,  relying 
upon  the  enormous  value  of  the  lands  owned 
by  the  company  in  the  Alessandro  Irrigation 
district. 

VALUABLE  LANDS 

As  late  as  April,  1893,  a  sworn  statement 
was  made  by  Mr.  Waters  that  he  was  "ac- 
quainted with  the  lands  owned  by  the  Bear 
Valley  Irrigation  company,  situated  in  the 
Alessandro  Irrigation  district,  and  know.s 
the  value  thereof,  and  that  the  same,  in 
the  opinion  of  the  affiant,  is  worth  two 
hundred  dollars  ($200)  per  acre."  Had  this 
statement  as  to  the  value  of  the  lands  been 
correct,  the  Bear  Valley  company  owning 
in  such  irrigation  district  over  12,000  acres, 
it  of  course  would  result  in  giving^  these 
lands  a  value  of  two  million  four  hundred 
thousand  dollars  ($2,400,000).  Upon  this 
theory  alone  could  even  Mr.  Waters  justify 
the  payment  of  the  dividends. 

THE  ENGLISHMEN'S  DISGUST. 
The  English  stockholders  thought  at  one 
time  to  reorganize  the  company  and  try 
to  save  the  largei  sums  they  had  invested 
therein,  but  finally  concluded,  after  careful 
investigation,  that  it  would  be  better  to  lose 
the  money  they  had  in  the  enterprise  Ihan 
to  put  in  largei*  sums  to  save  that  which 
was  lost. 

A  VALUABLE  PROPERTY. 

The  Bear  Valley  reservoir  system  was  or- 
iginally a  very  valuable  property,  an'd  it 
would  be  a  valuable  property  yet  if  it  could 
be  taken  out  from  under  the  stock-jobbing 
load  that  has  been  placed  upon  it  by  Mr. 
Waters  and  his  associates.  A  move  is  now 
being  made  by  the  users  of  water  from  that 
system  to  accomplish  this  end. 

SAD  CONDITION  OF  THE  VICTIMS. 

In  the  meantime  about  500  inches  of  water 
is  being  supplied  to  the  residents  of  Alessan- 
dro, Moreno  and  Perris  from  the  Bear  Val- 


ley system.  Thds  is  all  the  reservoir  can 
furnish  them,  although  their  lands  are  en- 
cumbered with  over  a  million  dollars  in 
bonds  to  pay  for  8375  inches.  The  best  sea- 
son they  have  only  received  about  160 
inches.  A  large  tract  of  land  has 
been  brought  under  cultivation  and 
these  lands  are  getting  the  water.  Other 
lands  subject  to  the  bonded  debt  get  no 
water,  and  many  of  the  owners  consider  the 
case  so  hopeless  that  they  allow  theirMands 
to  be  sold  for  state  and  county  taxes,  be- 
cause they  consider  them  worthless,  under 
existing  conditions.  These  are  the  lands 
tvhich  Mr.  Waters  and  his  associates  listed 
at  $250  to  $500  an  acre  in  their  prospectuses 
to  boom  the  stock  to  $160  a  share  and  sus- 
tain the  idea  of  15  per  cent  dividends. 

PROSPEROUS  BANKER  WATERS. 

After  the  wreck  of  the  Bear  Valley  com- 
pany, Mr.  Waters  moved  to  Los  Angeles, 
built  a  fine  residence  on  x\dams  street,  en- 
gaged in  banking,  purchased  the  gas  works 
at  Pasadena,  and  now  is  a  candidate  for 
Congress,  and  the  English  stockholders  and 
the  Alessandro  and  Perris  settlers  and 
landowners  are  paying  the  freight. 

COLOSSAL  DEBTS. 

When  the  affairs  of  the  Bear  Valley  Irri- 
gation Company  finally  went  into  the  hands 
of  a  receiver,  shortly  after  the  last  of 
these  fraudulent  dividends  had  been  de- 
clared, the  debts  of  the  corporation  were 
found  to  be  over  $1,200,000. 

MATTERS  OF  RECORD. 

All  of  these  facts,  with  many  interesting 
details,  are  matters  of  record  in  the  litiga- 
tion occurring  at  the  time  of  winding  up  the 
affairs  of  the  Bear  Valley  company. 

It  is  a  well  known  fact  that  the  Bear 
Valley  Irrigation  Company  has  not  now 
and  never  had  water  enough  to  irrigate 
twenty  thousand  acres  of  land,  despite 
Mr.  Waters'  circular  that  it  had  water 
sufficient  to  irrigate  250,000  acres. 

Few  men  have  had  such  a  business  oppor- 
tunity as  this  and  have  taken  such  advan- 
tage of  it. 


TEN    REASONS 

Why  the  Honorable  C.  A.  Barlow  Should  be  Returned 

to  Congress  from  the  Sixth  Congres= 

sional  District : 


1.  Secured  Four  Hundred  Thousand  Dollars  appropriation  in  the 
Lower  House  for  San  Pedro  Harbor. 

2.  He  secured  the  Pine  Mountain  and  Zaca  Lake  forest  reservation, 

3.  He  secured  passage  of  bill  granting  the  city  of  Santa  Barbara 
Three  Thousand  Five  Hundred  acres  of  land,  to  develop  Municipal 
water  supply. 

4.  He  secured  over  Twenty-eight  thousand  dollars  of  back  pension 
money  for  the  Old  Soldiers,  and  did  more  work  for  them  than  all  of  his 
predecessors  from  the  Sixth  District  put  together, 

5.  He  voted  for  the  free  and  unlimited  coinage  of  silver  at  the  ratio 
sixteen  to  one,  and  also  introduced  into  the  House  of  Representatives  an 
Income  Tax  Amendment  to  the  Constitution. 

6.  He  supported  all  measures  indorsed  by  organized  labor. 

7.  He  voted  against  the  Refunding  Bill. 

8.  He  is  in  favor  of  the  immediate  con.struction  of  the  Nicaragua 
Canal  by  the  government,  to  be  owned  by  the  government  and  operalad 
by  the  government  in  the  interest  of  the  people. 

9.  He  believes  in  the  policy  of  protection  of  labor,  and  agrees  with 
Speaker  Reed  "  That  the  Dingley  Bill  is  a  failure." 

10.  He  stands  for  equal  rights  for  all,  and  special  privileges  for 
none. 


^155,      , 


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